The major banks have kicked off the second-quarter earnings season with three of the biggest reporting on Friday morning. Although the U.S. broad markets are holding near all-time highs, these banks definitely took a step back with these earnings reports. The question is which of them had the best report out of the group.
Some could argue that market sentiment could have played into the investor reactions that are being seen Friday. Fed Chair Janet Yellen recently appeared before the House and Senate Banking Committees earlier this week, and she took a very dovish stance when it came to hiking interest rates. In a sense she is looking to further stabilize the markets, but with lower rates for longer the major banks are losing out on potential revenue.
However, financial stocks have made solid gains thus far in 2017, with a tremendous tailwind from the Trump rally, and Fed rate hikes in this time as well. In fact, in the past 52 weeks, most of these major money center banks have posted incredible gains. So perhaps, these earnings reports might be a good chance for some profit taking.
Based on the investor reaction, it seems that Citigroup Inc. (NYSE: C) came out on top for Friday’s report. The global bank reported diluted earnings per share (EPS) of $1.28 on revenue of $17.9 billion. In the same period a year ago, the bank reported diluted EPS of $1.24 on revenue of $17.5 billion. Second-quarter results also compare to the consensus estimates for EPS of $1.21 on revenue of $17.37 billion.
At Thursday’s closing price of $67.02 per share, the stock trades at a discount of about 15% to a book value per share of $77.36. The company had a return on equity (ROE) of 6.8% in this quarter, compared to 7.0% in the same period last year.
Shares of Citigroup were last seen trading down 0.6% at $66.61, with a consensus analyst price target of $68.64 and a 52-week range of $42.50 to $68.91.
Investment bank and financial services giant JPMorgan Chase & Co. (NYSE: JPM) reported diluted EPS of $1.82 on revenue of $25.47 billion. In the same period a year ago, it reported EPS of $1.55 on revenue of $24.38 billion. Second-quarter results also compare to the consensus estimates for $1.58 in EPS on revenue of $24.96 billion.
Book value per share totaled $66.05, up 5% from last year. Tangible book value per share was up 6% at $53.29. The company had a ROE of 12% for the second quarter.
Shares of JPMorgan were trading down 1.5% at $91.70 on Friday, with a consensus price target of $ and a 52-week range of $63.38 to $94.51.
Wells Fargo & Co. (NYSE: WFC) appeared to be the worst performer out of the three. The megabank said that it had earnings of $1.07 per share and $22.2 billion in revenue, compared with consensus estimates of $1.01 in EPS and revenue of $22.47 billion. The same period of last year reportedly had $1.01 in EPS and $22.26 billion in revenue.
The company has a book value per share of $36.53 and a tangible book value per share of $30.64, both well below the current price level. During the second quarter, Wells Fargo had a ROE of 11.95%.
Shares of Wells Fargo were down 2.5% at $54.19, with a 52-week range of $43.55 to $59.99 and a consensus analyst target of $58.19.